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Here's a useful article with information about using Flashvars in both AS2 and 3:
http://www.dreamincode.net/forums/topic/87635-using-flashvars-in-as2-and-as3/

Since you are using SWFObject, you...

Here's another awesome example:

http://viget.com/inspire/bi-directional-actionscript-javascript-communication

The addDot function only adds the decimal to the display_txt field. It needs to alter the value of num1S or num2S to be factored in.

The calculation sees "5.2" as 52...

From looking at the code, it appears that the value of num1 & 2 is only changed when number buttons are pressed, and not the decimal point.

The addDot...

I recommend CDATA for using html tags within the xml's data:
http://www.w3schools.com/xml/xml_cdata.asp

I also recommend that the text you want to format be contained in the xml element itself,...